Dairy farming in Canada

File:Cows on a farm - by Eric Dufresne.jpg

Dairy cattle in a barn in Quebec

Dairy farming is one of the largest agricultural sectors in Canada. Dairy has a significant presence in all of the provinces and is one of the top two agricultural commodities in seven out of ten provinces.

In Canada in 2011, there were 985,300 dairy cows on 12,746 farms across the country, an average of 77 cows per farm. From 1971 to 2011, the number of dairy farms in Canada has dropped by 91 percent. Quebec and Ontario are the major dairy producing provinces with 49% and 32% of the farms, respectively.

Dairy farming is subject to the system of supply management. Competition, both domestic and international is severely limited, restricting supply and greatly increasing profits for dairy farmers while greatly increasing the price of dairy products for consumers. Indeed, incomes of dairy farmers are consistently higher than incomes of farmers in other agricultural sectors. Due to supply management, the Canadian dairy industry is isolated from the global market, and the almost all the dairy produced in Canada is consumed in Canada, and almost all of Canadian dairy consumption is from Canadian farmers.

Supply management

Milk for sale in a supermarket in London, Ontario. Supply management raises the price of milk in Canada.

Dairy farming has been subject to the system of supply management since the 1970s. It restricts the supply of milk by limiting and controlling the amount produced domestically and starkly limiting imports with high tariffs. With a restricted supply, the prices increase, increasing profits for the farmers. Though this system allows the federal and provincial governments to avoid subsidizing the farmers directly, consumers instead subsidize dairy farmers in through artificially high prices paid for groceries. Most other agricultural sectors in Canada (grain, beef, pork, etc.) do not have similar controls, and for the most part compete fairly on the international market.

To keep supply low and prices high, it has been made deliberately difficult to become a new dairy farmer in Canada. Because the dairy industry is so lucrative, the right to own a single dairy cow is worth $28,000 (this does not include the actual price or value of the cow itself), and an average farm has $2,000,000 worth of quota. For farmers wishing to enter the market and start a new farm, the price of the quota can be prohibitively expensive, and up to 75% of start-up costs. This leaves those farmers entering the industry with a heavy debt burden.

Supply management isolates Canadian dairy from the international market. In order to keep prices high and farmers' profits high, purchasing milk from international farmers must be blocked. This was originally accomplished by a total ban on imports, but international trade rules forbade this. Instead there is a tiny import quota, around 8% of the cheese market or 1% of the yogurt market – the equivalent of around one teaspoon of yogurt per Canadian per year. Past this amount, tariffs are exceptionally high, in the neighbourhood of 246% for cheese and over 300% for butter. These high tariffs render imported food unable to compete. At the same time, because Canadian processors have to pay so much to buy milk, they are unable to compete internationally. Total dairy exports in Canada amount to only 5% of production.

History

The Canadian Dairy Farmers’ Federation was founded in 1934. The group became Dairy Farmers of Canada in 1942, and its mandate was to stabilize the dairy market and increase revenues for dairy farmers. In the face of lobbying, government programs were instituted in the 1940s and 1950s to increase prices and limit imports. 1958 saw the creation of the Agricultural Stabilization Board, though it was not limited to dairy. In the 1950s and 1960s there was significant volatility in dairy prices, dairy producers had too much bargaining power relative to dairy farmers, the United Kingdom was poised to enter the European Common Market, resulting in the loss of Canada's largest dairy export partner. These challenges led to the creation of the Canadian Dairy Commission, whose mandate was to ensure producers received a "fair" return on investment, and to ensure the quality and supply of milk, (though without concern for consumer prices).

In 1970, the National Milk Marketing Plan came into effect to control supply, with the federal government and the governments of Ontario and Quebec, the two largest provinces, signing on. By 1974 every province except Newfoundland had signed on. Concurrently with the domestic controls on supply and price, the high tariffs on imported products were put in place to protect Canadian producers from competition, and keep foreign imports to very low levels.

Statistics

In the 1940s butter production in Canada averaged 150,000 tonnes (150,000 long tons; 170,000 short tons) and cheese production averaged between 43,000 tonnes (42,000 long tons; 47,000 short tons) and 94,000 tonnes (93,000 long tons; 104,000 short tons). The United Kingdom received 23,000 tonnes (23,000 long tons; 25,000 short tons) in 1949.

Snapshot of Canadian Dairy Industry, 2011

Province	Number of Dairy Farms	Number of Dairy Cows	Production (hectolitres)	Dairy Cows per Farm	Production (hectolitres) per Farm
British Columbia	512	70,500	6,766,330	138	13,215
Alberta	592	90,000	6,603,623	152	11,155
Saskatchewan	182	30,000	2,304,452	165	12,662
Manitoba	344	44,500	3,213,844	129	9,343
Ontario	4,137	322,000	25,385,472	78	6,136
Quebec	6,281	366,000	28,958,369	58	4,610
New Brunswick	219	18,700	1,335,831	85	6,100
Nova Scotia	245	22,500	1,700,045	92	6,939
Prince Edward Island	200	13,000	1,005,675	65	5,028
Newfoundland & Labrador	34	5,900	476,783	174	14,023
CANADA	12,746	983,100	77,750423	77	6,100

See also

• Agriculture in Canada
• Supply management (Canada)
• Cheese in Canada

External links

• History of dairy farming in Canada